STRONG US JOBS REPORT REVIVES INTEREST RATE HIKE WORRIES

US indices plunged between 1.1%-1.5% on Friday after a strong jobs report fuelled fears that an interest rate hike could come sooner than later.

February’s nonfarm jobs report showed a gain of 295,000, above expectations of 240,000 in February and 257,000 in January. The unemployment rate fell to 5.5%, while hourly wages ticked up 0.1%, below consensus and off the surprise 0.5% gain in January.

The U.S. trade deficit for January fell 8.3% to $41.8 billion.

Dollar index rose more than 1% to fresh 11-year high of 97.81. Gold tumbled $31.90 to $1164 an ounce. Nymex oil fell $1.15 or 2.27% to $49.61 a barrel.

Euro breached $1.09. On Thursday, the European Central Bank announced will start its 1 trillion euro ($1.1 trillion) bond-buying program on Monday, March 9, with expectations to end in September 2016. Draghi also raised regional growth forecasts for 2015 and 2016 to 1.5% and 1.9% respectively.

European markets ended mixed.

For the week Dow and S & P 500 lost 1.5% each and Nasdaq was down 0.7%. European markets ended mixed, with FTSE and Spain ending lower while DAX, CAC and Italy gained between 0.2%-1.3%.

AT HOME

After falling nearly eight tenth of a percent in the first half, benchmark recouped more than they had lost to end higher by a fifth of a percent on the last day of the truncated trading week. Sensex settled at 29449, up 68 points while Nifty gained 15 points to finish at 8938. BSE mid-cap and small-cap indices gained seven tenth of a percent each. BSE Healthcare index soared 2.5%, becoming top gainer among the sectoral indices, followed by 1.1% rise in FMCG index. Metal index tumbled 1.9%, becoming top loser, followed by 0.6% cut in IT index.

Data released today morning showed that Japan’s Gross domestic product grew an annualized 1.5% in the October-December period, down from an initial reading of 2.2% in February, but still showed the country is emerging out of recession.

Asian markets are trading with cuts in the vicinity of four fifth of a percent and SGX Nifty is suggesting about 70 points lower opening for our market.

In Thursday’s report we had mentioned that the immediate support on the hourly chart is placed around 8865 with the stop loss of which trading longs should be held on to. Nifty, after briefly touching a low of 8849, rebounded to end at 8938.

A gap down opening today would again take the benchmark closer to lower level seen on Thursday. 8860-8840 continues to be immediate support zone where 8841 is the 61.8% retracement level of the recent 8669-9119 upmove. A breach of 8841 would open up the possibility of the retest of the 8670 bottom.